The ATO’s solution as to how SMSFs deal with an electronic service address (ESA) not capable of processing superannuation rollovers via SuperStream adds administrative complexity to the fund and trustees must be conscious of the effect the course of action has on other unrelated transactions, a technical specialist has warned.
Information contained in QC 47553 suggests an SMSF in this situation can switch to a messaging provider with an ESA that can accommodate SuperStream rollovers temporarily to allow them to process the transaction in question. The SMSF regulator then says when the process is complete, the fund can then switch back to its original messaging provider if so desired.
However, Accurium head of education Mark Ellem pointed out employing this strategy can create an issue regarding employer contributions.
“If you change from the ESA that you’re using currently [to receive] employer contributions … to an ESA that is rollover capable during the period you have [the new] ESA and are waiting for the APRA (Australian Prudential Regulation Authority) fund to roll into the SMSF, you won’t want any employer contributions coming in because they [will be using] the old ESA, which is not going to work,” Ellem said.
To make this approach work, he explained trustees would have to commit to a slightly complicated process.
To this end, the trustee would have to notify the ATO of the change in ESA, allow this ESA to apply until the member rollover from the external fund is made and then switch back to the old ESA after the transaction is complete and communicate this occurrence to the regulator again.
However, he acknowledged there was an easier solution for trustees should this process be deemed too troublesome.
“There’s that option or you [can] simply permanently change to an ESA that is rollover capable,” he said.
Should a permanent ESA change be preferred, the employer making contributions to the fund will have to be provided with the new details.
The ATO’s suggested solution has arisen due to the fact an SMSF can only have one ESA at any time.
The regulator has listed the SMSF message providers that are rollover ready on its website.
